Scaling Organizations: It is really a leadership challenge!

--

Scaling an organization is often romanticized as a thrilling ascent—more customers, more revenue, more impact. But beneath the surface lies a complex web of tensions, trade-offs, and transformation. Leaders navigating this terrain must do more than manage growth—they must evolve the very DNA of their organizations while preserving what made them successful in the first place.

First, what is scaling and how different is it from growth? Two of entrepreneurs’ favourite topics are growing and scaling a business- and sometimes the enthusiasm with which they’re used often exceeds the accuracy. Scaling is when you are growing a business in a more efficient and productive way, while simultaneously enhancing and aligning your systems, structure, people.

When should you think about scaling? When you want sustainable, profitable growth—especially if your business is expanding faster than its current capabilities. You will see some clear signs: people working longer hours, small but costly execution slips (a quality lapse, a compliance miss), or even finger-pointing across teams. You may feel your systems are outdated, struggle with control, or sense the need for new capabilities. Add rapid hiring—where newcomers bring varied ways of working—and the pressure only grows. As your business grows exponentially, the real question is: is your organisation keeping pace?

Daniel Kahneman’s insight is apt here, applying his basic idea from ‘Thinking Fast and Slow’: “The black art of scaling a human organization requires learning when and how to shift gears from fast to slow ways of thinking.”

Based on my own experience and discussions with many who have seen big growth, both startups as well as other firms in hyper growth phase, I try and explore the core challenges of scaling and summarise some actionable insights for leaders who want to build institutions that are not only bigger, but better.

The Tensions That Define Scaling

Scaling isn’t just about doing more—it’s about doing differently. As organizations grow, they encounter a series of paradoxes that demand thoughtful navigation. Here are the five most common paradoxes we need to resolve:

1. Flexibility vs. Process

Startups thrive on agility. Decisions are fast, roles are fluid, and experimentation is encouraged. But as headcount grows, so does the need for structure. Leaders must introduce guidelines and processes without stifling innovation- and that’s a challenge.

What to watch for: Over-engineering too early can kill momentum. Under-structuring too late can lead to chaos.

Leadership move: Create “discretion within a framework.” Empower teams to make decisions, but within clearly defined guardrails. Leaders must know when to trust intuition and when to lean on deliberate systems. One thumb rule- if there is a risk of compliance issues or brand reputation, then err on the side of process- people may complain a bit but they will get used to it. The other way is to look at types of decisions- some are reversible (you can change them at little cost) whereas some are non-reversible (like a big Capex or acquisition or brand investment), which could call for more rigour (Mr Bezos apparently used this framework)

2. Speed vs. Structure

In early stages, speed is everything. But scaling demands a shift from “just doing” to “knowing why we’re doing.” This means building institutional memory, documenting decisions, and aligning teams around shared goals.

What to watch for: Speed without clarity leads to burnout. Structure without agility leads to stagnation.

Leadership move: As Huggy Rao and Rob Sutton (in their book Scaling Up Excellence) say, ‘the role of hierarchy is to defeat hierarchy’. Build structures that enable—not inhibit—action. Encourage bottom-up feedback loops and cross-functional collaboration. Scaling requires a penchant for parsimony, for understanding the nuances of an organization and its people so you can make things as simple as possible. Focus on reducing the ‘cognitive overload’ of operating people to help them move fast- this may call for some structure to get the speed!

3. Strategic vs. Operational Focus

As organizations scale, leaders must ‘zoom out’. The temptation to stay in the weeds is strong, especially for founders and early executives. But scaling requires a shift from firefighting to future-building.

What to watch for: Leaders stuck in operational mode miss strategic inflection points. Not only leaders, everyone is running around and getting things done in a fast-growing organisation- someone should step back and plan for future.

Leadership move: Link short-term realities to long-term dreams. Set transformation goals alongside operational KPIs- ensure leaders focus on ‘productive capability’ rather than just ‘production’ (to borrow the terms from Steven Covey). Ensure you have organisation development goals for your leaders- about succession development, team engagement etc.

4. Internal vs. Lateral Talent (also homogeneity vs diversity)

People are the multiplier in any scaling equation. Talent decisions become more complex as organizations grow.

What to watch for: Early teams often share similar backgrounds and mindsets. That cohesion can be powerful—but it can also become a liability. As you grow you have to hire people- and that creates some tension with existing folks. Should you promote from within or hire externally? Both paths have merit—but each comes with risk. Internal talent brings cultural continuity and institutional knowledge. Lateral hires inject fresh thinking and diversity of experience, and bring new capabilities.

Leadership move: Intentionally diversify thought, experiences, and perspectives. Create psychological safety so diverse voices are heard. This is the time to build rigorous talent systems. Have honest, recurring talent discussions- this helps set the culture in the future. Delegate meaningfully and build succession plans. It might sound counter intuitive, but as you scale and hire new people- it is the right time to spend on your talent systems and talent discussions. Scaling is about building leadership depth.

4. Culture: The good old vs the uncertainty of the new

When you hire from different organisations, they all come with different histories and their own idea of what works well. The existing tenured people cherish the current culture- and any change is not very positively embraced!

As organizations scale, culture becomes harder to define—and easier to dilute. As you know, culture is built through shared behaviours, rituals, and values. Remember, culture is the behaviours you want, that you recognise, and the behaviours you don’t want, but you tolerate!

Leadership move: Be intentional. Culture isn’t built by slogans—it’s built by choices. And by your behaviours- be a role model. But communicate what you want clearly and keep repeating that. Recognize and reward the right behaviours. Address misalignment early.

Your role as a leader- building operating system of scale

Ultimately, scaling is a leadership challenge. It’s not just about what you build—it’s about how you lead.

1. Agree on Your “Way of Working”

Every organization needs an operating system—a shared understanding of how decisions are made, how teams collaborate, and how success is defined. Codify principles. Make them visible. Revisit them often. Your “way of work” should evolve, but it should never be ambiguous. Role-model the behaviours you want.

2. Build Future Leaders

The biggest lever for scaling isn’t strategy—it’s succession and leadership depth. Leaders must consciously develop others, not just execute tasks. The best way to build an institution and scale is to build the future leadership. Create space for emerging leaders to grow and thrive.

3. Embrace Creative Tension

Scaling is full of contradictions. The goal isn’t to eliminate tension—it’s to harness it. Frame tensions as creative, not destructive. Encourage dialogue between opposing forces—speed vs. structure, intuition vs. process, tradition vs. innovation.

4. Articulate a compelling, common narrative

One powerful metaphor that I have seen Sunil Mittal use is the idea of “wartime and peacetime.”  (late noughties in Airtel when the mad subscriber growth was slowing and we needed to bring efficiencies). Wartime demands urgency, resilience, and rapid decision-making. Peacetime allows for reflection, optimization, and long-term planning. But you have to communicate your own narrative that tells people about the change, and why! Help your teams understand the need for change. Use the narrative to create clarity and cohesion. Scaling isn’t linear—it’s episodic.

Scaling is a deeply Human Endeavor

Scaling an organization isn’t just a technical challenge—it’s a deeply human one. It requires leaders to balance paradoxes, build systems, and nurture culture—all while staying grounded in purpose.

As you scale, ask not just “How do we grow?” but “What kind of institution are we becoming?”

Because in the end, scaling isn’t about getting bigger. It’s about becoming better—more thoughtful, more resilient, and ready for a different orbit.

Trust us to get your leaders to be at their best!

Connect with us

Know your mentor